KUSUM Scheme to be implemented in July 2018

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Kisan Urja Suraksha evam Utthaan Mahaabhiyan, the solar pump distribution scheme was announced in the 2018-19 Budget. The scheme, which was announced to bring a respite to farmers from high-cost diesel-run water pump sets and erratic power supplies, is yet to see the light of the day.

The Centre will subsidize 30 percent of the cost, the State will do the same, and 30 percent will be a loan. The farmer has to give an upfront cost of 10 percent and then pay the installments to the bank. Speaking to reporters on February 20, Minister of State (Independent Charge) for Power and New and Renewable Energy, RK Singh had said that a Cabinet approval for KUSUM will be accorded within 20 days, i.e. in March 2018.

Almost three months later, the approval is still pending despite record high diesel prices pushing up the costs of running water pump sets and hurting the income of farmers. Shri Singh now said that the KUSUM scheme will be implemented from July.

Shri Singh, had said that the scheme required a Central Financial Assistance of Rs.48,000 crore for 10 years. A similar amount will have to be parked by the States and the financing institutions, he had explained. Effectively the scheme envisaged is of close to Rs.1.44 lakh crore after the approval from the Cabinet.

The price of diesel has risen steadily from February 1 on the back of higher crude oil and benchmark product prices. On February 1, diesel sold at Rs.64.11 a litre in Delhi but by May 29, it was selling at Rs.69.31 a litre. Prices have cooled since and on Friday diesel sold at Rs. 68.58 a litre in the Capital. Compared with the corresponding period last year, diesel prices are up 24 percent. Experts estimate the share of fuel in the cost of cultivation per acre at between 10 and 25 percent. While costs are rising, realizations for farmers are under pressure due to the bearish trend in prices across categories of commodities. According to official estimates, India had about 30 million farm pumps of which 10 million are diesel powered.

In addition to cost-saving, KUSUM also envisaged a source of income for farmers by selling excess power back to the grid. KUSUM is modelled on the success of a similar programme in Gujarat’s Kheda district where six farmers raked in revenue of Rs.7 lakh from selling surplus power over two years. This too is an opportunity that farmers have lost out because of the delay in approval.